Business Bookkeeping Basics
 One of the most critical parts of your business is keeping good financial records and knowing how to read and understand the information that is in those records.
Even if you hire a bookkeeper to come in and handle your record keeping, you need to take a little time to understand bookkeeping basics. This will help you understand what is happening with your businesses finances.
Basic bookkeeping is merely recording all of the financial activity of a business. This is done by making entries into a financial journal. There are two kinds of journals that are typically; single-entry, and double-entry journals.
Side Note: Insider's Guide To Your Own Virtual Bookkeeping Business
Single-Entry Bookkeeping
If you have ever filled out the journal in the back of your checkbook, then you are familiar with single-entry bookkeeping. This is bookkeeping at its most basic level. Every business transaction that takes place gets entered into the journal. The amount of the transaction gets listed as a debit, which is money coming into the business, or a credit, which is the money that is leaving your business.
It is important that you remember to account for every single transaction. If you take .44 cents out to buy a postage stamp, you need to write it down in the journal.
Single entry accounting keeps very basic information. It assumes that all of the money is going into or coming out of one account. For very small businesses that are not very complex, this system might be adequate. If your business is getting bigger, then you need to move to more complex bookkeeping systems.
Double-Entry Bookkeeping
Double-entry bookkeeping works with the understanding that any money from a business transaction had to come from somewhere and it has to go somewhere. That means if money is marked down as being spent in a category, then that money needs to be subtracted from somewhere else.
Each transaction takes place in two separate accounts, and an entry has to be made in each account (a double-entry).
Trial Balance
Another of the bookkeeping basics is reconciling all of your accounts at the end of the accounting period, typically at the end of each month. A report is created called a trial balance. All of the information that was tracked in the journals is transferred to the trial balance to make sure that all of the information was recorded accurately.
All of the credits and all of the debits are totaled for each category. If everything was entered correctly, then the total credits and the total debits should be the same. If that number is different, then the account is out of balance, and that means there is a mistake somewhere.
When that occurs you will need to go back through your journal to find out where the mistake occurred. The more competent your records are, the easier it will be to find those mistakes.
Know Your Basics
 Whether you are using an outside bookkeeping service, or using bookkeeping software, it is important to know how bookkeeping systems work.
By understanding bookkeeping basics, you will have a better understanding of your businesses financial position.
If you are having trouble understanding bookkeeping, you need to devote the time and resources so that you learn what you need to know. You can learn more about online at Dwmbeancounter, or you can take a bookkeeping course at your local college or business school.
Bookkeeping is not hard to understand. The most important thing to remember is that you need to track every business transaction accurately. If you do that every time, you will be able to see any financial difficulties long before they hit.
Points to Keep in Mind…
- Remember to keep track of every cent that comes into or leaves your business.
- Even if you are hiring a bookkeeper, you should learn the basics of bookkeeping and accounting.
- Single entry journals are the simplest form of journal entry.
- Double entry journals take more time, but are more likely to catch journal entry errors.
- Running a Trial Balance at the end of the accounting period makes sure everything was accounted for correctly.
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